PwC fined for serious audit failures at Wyelands Bank

In the United Kingdom, PricewaterhouseCoopers (PwC) has faced significant scrutiny after being sanctioned by the Financial Reporting Council (FRC) for serious failings in its audit of Wyelands Bank. The audit in question pertains to the bank's financial accounts for the year 2019, which were not properly assessed as required by regulatory standards. The FRC's investigation revealed that PwC breached necessary requirements across six key areas, including risk assessments and the audit of related party transactions. These breaches were especially concerning given the bank's precarious financial position, which precipitated regulatory action from the Prudential Regulation Authority (PRA). The PRA had already mandated Wyelands Bank to repay customer deposits in 2021 due to worries about its overall finances, a situation exacerbated by the collapse of Greensill Capital. Such conditions raised large red flags regarding the bank's compliance with laws and regulations. In recognizing its errors, PwC's fine was initially set at £4.5 million before being reduced to £2.9 million owing to the firm's cooperation and admissions of guilt. Jonathan Hinchliffe, who oversaw the audit, was separately fined £33,412 for his oversight. The deputy executive counsel at the FRC emphasized that auditors must fully understand the entities they assess, especially during periods of ownership change and shifts in business activities. In this case, the auditor's lack of appreciation for the risks associated with Wyelands Bank's connections to GFG Alliance ultimately endangered retail depositors. PwC acknowledged these shortcomings, stating they had launched a multi-year effort to enhance audit quality, which has since led to improvements reflected in audit supervision reports. This incident highlights the vital importance of rigorous auditing practices and strong regulatory frameworks to protect consumer interests, especially concerning financial institutions.